Basis Point

Basis point (or bps or bips) is a fractional unit of a percentage. In value, it is equal to 0.01 percent (one-hundredth of a percent) or 0.0001 in numerical/decimal form.


If we say 30 basis points, we would mean 0.30 percent.

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Basis points are used to denote small changes and is especially relevant to financial measures. The smaller the numerical change, expressing it in basis point is easier to state than state the change in percentage.

So, we can even go smaller with basis points and talk of say, 3 basis points, to indicate a change of 0.03 percent change.

Basis points come in handy when describing changes in interest rates, for example.